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08. April 2009

US zinc premiums slips but some signs of recovery seen

Platts reported that, while some zinc players report seeing the first glimmers of an economic restart, the mathematical realities of supply and demand are still holding sway for now, with price assessment for special high grade zinc inching down slightly to 2.8 cents plus LME cash from last week's 2.85 cents. An alloyer source told Platts that "I haven't seen a pickup in demand at all. Despite some talk of new US housing starts, which some say actually represent purchases of foreclosed mortgages, and occasional surges in commodities and stocks. I think the market will come back down. All I see is what's here and it's not busy, so when you see the commodities market go up, you wonder why."

Another alloyer said that despite increasing chatter of better times around the corner zinc premiums levels are becoming almost a non issue, for now. He added that "Volumes are down so much, that the premium is not as relevant because people are buying so much less. I'll tell you the premiums are zero, I'll tell you the premiums are 4 cents, it doesn't matter if you've got one truck load. If you're talking about rock-bottom premiums, we're there."

The first alloyer told Platts that he sold a single truckload of alloy number 3 in the past week at a 16.5 cents premium which included roughly a penny and a half of freight, a shipment going about 450 miles. The second alloyer reported selling 6 truckloads of alloy number 3, each containing roughly 45,000 pounds, to multiple buyers at a 15 cents premium, including a penny in freight. A third alloyer agreed the alloy number 3 market is slipping south of 16 cents and put the range at 15.5 to 16 cents. In any case, market sources seemed unclear on whether the first signs of a business pickup have arrived. A trader said that "Things have started to pick up marginally in the last couple of days. The market has to get marginally better and I think that's what we're seeing. It is certainly not a market that, in any way, shape or form, is getting better, it still may be the third or fourth quarter before we start seeing anything. March, April and May are traditionally the three highest consumption months of the year. It is not going to be this year."

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